When you are on the cusp of making a critical decision, such as buying or renting a condo in Singapore, many factors come into play. The burgeoning real estate industry on the island is a clear indicator of the ever-increasing number of folks scouting for living spaces. What, then, should you consider when in the catch-22 stance?
Degree of Commitment
You might not be solidly sure of the neighborhood or the neighbors. Sometimes neighbors can be bothersome and pesky. Living in a condo for rent in Singapore instead of buying one gives you the freedom to move when you feel you don’t like the neighborhood. The moment your rental contract for the condo expires, you can move. In fact, any move before the expiration is possible, though you will (likely) forfeit your deposit.
Moreover, there are people whose life is somehow nomadic. To them, renting is a more viable option as it provides them the flexibility of relocating places and moving to different environments. For example, people whose professions entail a lot of international postings and travel.
Therefore, buying a condo as opposed to buying requires a high level of commitment, and should be done by people who are not likely to move every so often because the cost of buying and selling a condo is prohibitive. It is worse if you are financing the condominium with a loan, especially since you will incur a penalty for early repayment. And that is excluding the administration costs and agent fees involved. Worryingly, you may incur significant capital losses if you sell the condo property during a property slump.
That said, having a private condo to call your own comes with a beaucoup of benefits. There is that ineffable pride and prestige of being the owner of a high-end property. And, you also have the unfettered freedom to renovate it to reflect your whims and fancies, just as long as your pockets permit.
The High Installment
The most practical concern for most prospective condo owners is the financial aspect of the whole thing. This is a huge financial commitment. Often, people spend the rest of their working lives paying off the mortgage.
But you will first have to come up with an installment, which in some cases is prohibitive. And in most of these cases, since it is a private property, you will get the mortgage financing from a private financial institution in Singapore. So, you will have to stump up a huge amount of cash for the down-payment. If there is no pre-existing home loan, the down-payment will be pegged at between 5% and 10% of the purchase price if the loan tenure is more than 30 years or extends beyond the age of 65. With a pre-existing loan, the down-payment shoots to 25% of the purchase price.
To many, especially younger people, raising the down-payment presents an insurmountable hurdle. Thus, renting becomes a lucrative option when looking for a place to live in, but do not have the requisite cash.
But there are people who can afford the cash to buy a condo, but have a more lucrative investment where they want to spend the cash instead of buying the condo. Consequently, they prefer to rent rather than buying. In such case, a person needs to carefully consider if the investment will fetch in bigger returns in the long-run more than buying the condo would.